Factoring – an injection of cash based on outstanding invoices – could help companies with their cashflow during periods of market instability.
According to business analyst Gartner, market volatility and risk management are two of the four challenges currently being faced by chief information officers.
CIOs must decide if existing risk models are enough to assess their companies’ liabilities in the current economic climate, Gartner warns.
But with risks on the scale of government defaults and instability across the eurozone, the analyst adds that detailed testing of forecasts may prove difficult.
“Can existing risk models accommodate alternatives to the lack of historical data? In many cases, as much as three years of back-data is required,” points out Gartner fellow and vice-president David Furlonger.
Factoring is one way businesses may be able to manage their debtor liabilities, by receiving an injection of capital based on amounts owed by clients.
Up to 85% of the value of current invoices can be received via factoring, with a charge deducted once the client pays the relevant invoice and the funds are retrieved.
